Many companies in the business world use the accrual-based accounting method. When goods are purchased and received, the accrual account is credited. When an invoice is received that is matched to a Purchase Order (or “PO”), the accrual account is debited for the amount invoiced. If all the receipts and invoices for purchase orders are perfectly matched, the accrual account balance should be zero. These accrual accounts must be reconciled and maintained to ensure that liabilities are properly recorded. The accrual account balance may not be zero due to various business problems (over-receipt, over-invoice, invoice not matched to PO, etc). Under such circumstances, the balance in the accrual account must be written-off so that the company's financials can be correctly stated.
Account reconciliation is an accounting process utilized to verify the accuracy of a ledger account balance and its accounting entries. Account reconciliation may involve a post-fact inspection process because the accounting events have already happened. Account reconciliation may enable the finance personnel to manage any outstanding items. The outstanding items are accounting entries that currently compose the ledger account balance. In order to control the outstanding items, account reconciliation may use a reconciliation sheet to provide a detailed analysis of all accounting entries that are part of a ledger account.
U.S. Pat. No. 8,046,277 to Zhu et al. discloses a computer-implemented method of managing reconciliation and write-off data in an accrual-based accounting environment, which may include steps of retrieving a plurality of transactions associated with a predetermined purchase order from a database coupled to a computer network; calculate an aggregate accrual balance of the retrieved plurality of transactions and associate the calculated aggregate accrual balance with a unique first identifier; when the aggregate accrual balance associated with the unique first identifier indicates that the predetermined purchase order is unbalanced, loading a first reconciliation table with first reconciliation information and storing the first reconciliation table in the database; enable writing-off the aggregate accrual balance, and when the aggregate accrual balance has been written-off, remove the first reconciliation information from the first reconciliation table and store the first reconciliation table in the database.
U.S. Pat. No. 8,156,143 to Hotz discloses a system and method to reconcile Human Resource databases, including payroll, accounting, tax and travel databases, are provided. The system and method may include a database aggregation component that automatically gathers and stores a plurality of databases in a corporation business information system wherein these databases may be logically related to each other and a database reconciliation component that is capable of querying a database for retrieving data entries based on user instructions or on requests automatically generated according to preset conditions. The reconciliation method may further compare data from logically related databases. If discrepancies exist in a comparison result, the method may provide a drill-down step where data at next level of detail may be retrieved according to automatically generated queries. This reconciliation process of comparison and drill-down for more detail may continue until a preset condition is satisfied or there is no further detail to retrieve. The system may produce a report relating to the reconciliation results.
U.S. Pat. No. 8,332,286 to Lopes discloses a system and method for a comprehensive account reconciliation process, which ensures a predictable level for the accuracy of the ledger account balance. The present account reconciliation process includes nine reconciliation methods both transactional and non-transactional. The account reconciliation processes are part of overall accounting accuracy methodology that includes five macro processes where reconciliation takes place during the execute macro process. The reconciliation methods cover the diverse interactions between the ledger accounts and supporting documents that are either externally or internally generated.
The foregoing examples of the related art and limitations related therewith are intended to be illustrative and not exclusive. Other limitations of the related art will become apparent to those of skill in the art upon a reading of the specification and a study of the figures.